SINGAPORE, 18 February 2022 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on Budget 2022.
An examination of Budget 2022 has thrown out a number of salient observations.
Selected businesses in the hard-hit sectors during the pandemic have been thrown a lifeline, albeit at a reduced magnitude, given that the announced $1,000/worker or $10,000/firm handout is lower than the Jobs Support Scheme during the course of last year. The government is sending a strong signal that as we regain normalcy, firms have to increasingly reinvent themselves to pull through the pandemic. The government remains committed to avail an array of solutions for firms to improve their productivity and worker skills through the enhanced Productivity Solutions Grant and the SkillsFuture Enterprise Scheme. The support for the broader economy is also tapered with the Jobs Growth Incentive and various loan programmers extended by six months. On the whole, the push towards greater advances in research, innovations digitalization, productivity and upskilling is an integral part of the national economic strategy to build a resilient ecosystem amid rising global competition.
Another decisive move is the stepped-up efforts to punch above our weight in the global fight against climate change. Setting clear and ambitious emission targets, and raising the carbon tax over the course of this decade sends a strong signal to corporates and even asset owners to streamline the efficiency of their sourcing, production processes and upgrade or redevelop assets. We expect the rejuvenation momentum for aged assets in the office and industrial segment to pick up. The green finance market is likely to be further catalyzed as the government introduced a framework for green finance.
A key thrust was a concerted slew of measures to tax the haves while shielding the have-nots from the GST hikes and the rising costs of living. A widely anticipated introduction of a wealth tax was put on hold, but it was no surprise that other low-lying fruits were not spared. To this end, the increase in the highest marginal personal income tax rates, the higher tax on luxury cars, as well as higher property tax rates on non-owner-occupied properties or prime owner-occupied properties is a welcome move to reduced social inequality and strengthen our social compact. All but the top 5-10% of residents are likely to be unaffected by this multi-pronged increase in tax, and we do not expect a significant impact on the property market. The extension of the Progressive Wage Model to more sectors like retail and food services, coupled with Workfare enhancement is another redistributive effort. However, some firms are likely to face challenges as they grapple with higher costs due to the Progressive Wage Model and higher EP and S-Pass qualifying salaried, against a tapering of Covid-related support and a still challenging economic environment.
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